ESPN sells majority stake in X Games to private equity firm
The company’s board approved the move at the meeting today after a four-hour discussion of the deal that will see the games giant sell its majority stake in X Games to KKR (KKR), a Denver-based private equity firm.
The board also approved a transaction with Universal Pictures, which owns a 49 percent stake in X Games, so the company will not have to buy out the interest of the private equity firm, which has not been disclosed. The companies will share a new management team under the new private equity arrangement, and will be overseen by a new, separate, majority of independent directors from The Walt Disney Co., The X Games Inc. board announced.
“The board is very pleased that we were able to bring in a third party that has the financial resources and expertise to operate, manage and direct our business as well as support our long term growth,” said Bill Zimmerman, X Games CEO. “We look forward to a new chapter in X Games that will be run by and for our employees, rather than for shareholders.”
The company had previously been looking to sell up to $60 million worth of its shares to the private equity firm, which has a track record of transforming companies. X Games had previously raised $14 million in private equity in May, according to the company’s filings with the U.S. Securities and Exchange Commission. The stock closed up $1.21, or 1.9 percent, to $10.49 after the announcement of the new management team and the sale of the company to KKR.
KKR’s investment in X Games was disclosed in a SEC filing last November, and company filings said that the deal would value the company at between $450 million and $500 million.
The deal with KKR comes after the company’s previous private equity investors, New Enterprise Associates, have pulled out of the company. New Enterprise Associates had been involved in acquiring the company’s initial $12 million in Series A funding in 2008.
KKR’s investment in X Games does not mean that the company will exit the event-sports business permanently. Zufffer Holdings, which owns a 10 percent stake in X Games said today that it is exploring the opportunity to buy out X Games as well as other assets.
Kathy Long, chairman and